- ECB QE hopes fade
- German trade surplus widens
- UK industrial output falls
FTSE 100: -1.25%
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FTSE MIB: -2.69%
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Stoxx 600: -1.40%
Stocks in the euro-area retreated as hopes faded on whether the European Central Bank (ECB) will introduce quantitative easing to address the stagnant recovery.
ECB Executive Board member Sabine Lautenschlaeger said late yesterday that an asset-buying programme should only be used in the event of an emergency such as deflation.
Her comments came after ECB President Mario Draghi told his monthly news conference last Thursday that the bank's Governing Council was "unanimous in its commitment to also using unconventional instruments within its mandate, should it become necessary".
Draghi has said that QE may not prove as effective as it has in the US since Europe relies on traditional forms of bank lending more than capital markets.
The ECB is also under mounting pressure to rein in the strength of the euro.
Chief Executive of Airbus' passenger jet business Fabrice Bregier has said the ECB should intervene to push the value of the euro against the dollar
down by 10% from and "excessive" $1.35 to $1.20-$1.25.
"[Europe] cannot be the only economic zone of the world that doesn't consider its currency as a weapon...as a key asset to promote its economy," he told the Financial Times.
The euro rose 0.06% to $1.3613 in afternoon trade.
German trade surplus grows
The German trade surplus widened to €18.8bn in May from €17.2bn a month earlier, beating the €16.2bn forecast.
German exports fell 1.1% month-on-month in May after rising 2.6% the previous month. Analysts had expected a 0.4% drop. Imports declined 3.4% in May following a 0.2% increase in April, compared to the consensus estimate for a 0.5% gain.
Meanwhile, UK industrial production edged lower by 0.7% over the month in May, according to the Office for National Statistics (ONS), mainly due to a fall in manufacturing output.
Consensus forecasts were for a rise of 0.3% month-on-month (3.2% year-on-year).
Manufacturing output contracted by 1.3% month-on-month (3.7% year-on-year). The market had been expecting a gain of 0.4% on the month and 5.6% on the year.
Airlines slide on Air France profit warning
Air France-KLM declined after the European airline cut its full-year earnings forecast amid overcapacity on North American and Asian routes, poor demand for freight and the fallout from a dispute with Venezuela. International Consolidated Airlines (IAG) and easyJet also edged down.
Marks & Spencer fell after reporting a 12th straight quarterly drop in non-food sales.
Commerzbank dropped on reports Germany's second-biggest bank may incur penalties of at least $500m as part of a deferred prosecution agreement with authorities as soon as summer in the US.
Royal Philips advanced as the Dutch company announced a new management structure for its health care business following weak second quarter results.
In the US, aluminium producer Alcoa will unofficially open the second-quarter earnings season today.
Brent crude futures dipped 0.915% to $109.624 per barrel, according to the ICE.